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Wednesday, May 22, 2024

IMF warns of low growth due to Coronavirus

Almost 300 million students are out of schools around the world with Italy the latest country to shut schools over the deadly coronavirus. Tourism has plunged, and airliners estimate $130 billion loss. The IMF urges an all-out global offensive against the epidemic for coronavirus can break the economies. The virus has infected over 93,000 people worldwide and killed more than 3,200 people, mainly in China.

The new coronavirus epidemic poses a “serious threat” and will slow growth in the world economy to below the 2.9 percent posted last year, IMF chief Kristalina Georgieva said Wednesday.

The COVID-19 outbreak “is no longer a regional issue, it is a global problem (that) calls for global response,” Georgieva told reporters.

The epidemic’s impact on confidence and steps to contain it are impacting economic activity, with the result that “global growth in 2020 will dip below last year’s levels,” she said.

The IMF in January forecast growth this year of 3.3 percent, which means at least a half-point will be lost to the virus. But “how far it will fall and how long the impact will be is still difficult to predict,” she said.

Georgieva said the fund’s analysis had assumed the virus would be largely confined to China, which would have led to a sharp but short economic slowdown, followed by a quick recovery.

“Unfortunately over past week we’ve seen a shift to a more adverse scenario for the global economy,” due to the “sheer geographic spread of the epidemic around the world,” impacting a third of the IMF’s 189 member countries.

The virus has infected over 93,000 people worldwide and killed more than 3,200 people, mainly in China.

Georgieva and World Bank President David Malpass spoke to reporters after a conference call of finance officials from the member nations, who directed the IMF “to use all its available financing instruments to help member countries in need.”

“We are determined to provide the necessary support to mitigate the impact, especially on the most vulnerable people and countries,” the statement from the governing body, the IMFC, said.

Read more: Global economic crisis ahead of Coronavirus! IMF warns

Georgieva said the Washington-based development lender has $1 trillion in overall financing capacity, including $50 billion available without a formal IMF program, and $10 billion in no-interest funds for the poorest countries.

The World Bank on Tuesday announced it had $12 billion available to help countries respond to the coronavirus threat. Malpass told reporters “the speed and breadth of the response is crucial to its effectiveness.”

AFP with additional input by GVS News Desk